Weekly Mobile Notes: Apple, Nokia And RIM

The past week saw quite a few developments in the mobile sector. AT&T (NYSE:T) announced Tuesday that it will be launching Nokia’s (NYSE:NOK) debut Windows Phone 8 devices in the U.S. on November 9th, ending weeks of speculation about the pricing and availability of the new Lumias. Apple’s (NASDAQ:AAPL) stock meanwhile declined almost 11% over the past week as concerns surrounding Apple’s ability to service iPhone 5 demand, together with possible margin compression due to some of the new product launches, took toll. Research in Motion (NASDAQ:RIMM), on the other hand, saw some optimism return to the stock as the company announced that its new BB10 devices have entered the lab testing phase with 50 carriers, reaffirming its earlier guidance of launching BB10 in the first quarter of 2013.

Apple

For over a month now, Apple has been seeing its stock price decline steadily. It’s now close to $530, not long after scaling to over $700 in September. A big reason for the recent fall has been concerns regarding a possible supply shortage for the fast-selling iPhone 5, which might cause Apple to fall short of the high holiday demand this year. In addition, there are concerns that the company’s margins are starting to feel the pressure of competition after Apple guided for fourth quarter margins to decline by about 400 basis points (4%) sequentially and 800 basis points year-over-year. There has also been much criticism around the iPad mini, which many believe has not been priced aggressively enough to dissuade consumers from purchasing other lower cost options such as Google’s Nexus 7 and Amazon’s Kindle Fire tablets.

While many of these concerns are valid, Apple’s strong supply chain gives us little reason to believe that the supply shortage will be so severe as to cause customers to purchase rival handsets instead. We see most of the unmet iPhone 5 demand, if there is any, being deferred to the following quarter; so the overall impact on Apple would likely be minimal. The margin impact that the company has guided for in the holiday quarter is due to high component costs, which we believe will decline as the products get further ahead in their release cycle. (see Sticking To Apple’s $700 Price Estimate Despite Supply And Margin Concerns)

Nokia

After weeks of speculation, the dates for Nokia’s Lumia launch in the U.S. are finally out. AT&T, which is backing the Windows Phone franchise to the hilt, announced Tuesday that it will be launching both the Lumia 920 and the Lumia 820 on November 9th with pre-orders starting on the 7th itself. Nokia’s U.S. foray is also being backed by T-Mobile and the country’s largest wireless carrier, Verizon, who have both announced exclusive access to custom-made variants of the mid-range Lumia 8xx smartphone. With a customized smartphone at three of the four largest national carriers, Nokia finally has enough exposure to create a niche for itself among U.S. consumers.

The U.S. smartphone market is extremely crucial for handset makers since success here generally translates into a positive consumer sentiment in other markets. It is therefore important that Nokia figures out the U.S. market, where it has historically lagged rivals. Product-wise, the Lumia looks a strong competitor to other popular smartphones and giving carriers’ exclusive access to different custom-built Lumias could help Nokia win more carrier backing, which, together with Microsoft’s Windows push in the coming months, might prove instrumental in putting more Lumias in people’s hands. (see Nokia’s U.S. Assault Starts As AT&T Announces Lumia Launch)

RIM

RIM finally saw good news flow in the last week, giving its battered stock some much-needed respite. The company CEO, Thorsten Heins, confirmed in a press release last week that the new BlackBerry 10 platform has entered the ‘Lab Entry’ testing phase with more than 50 carriers across the world. This, he claimed, was a critical milestone in RIM’s quest to launch its first BB10 devices in the first quarter of 2013. (see RIM Moves Closer To $12 Fair Value As BB10 Enters Carrier Testing Phase) While this brings some confidence in the management’s launch guidance, the twice delayed launch to Q1 2013 implies that competitors such as Apple and Samsung will continue to munch on RIM’s market share until then and even beyond as RIM tries to generate positive market sentiment around the new devices. To add to RIM’s woes, competition in the smartphone market is only increasing with Microsoft making a reinvigorated mobile play with its combined Windows 8/Windows Phone 8 push this holiday season.

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